Zohydro or Pot, A study in Federalism

The debate continues on Zohydro. There has been a significant amount of opposition to the distribution of this opioid. Despite the recommendation against Food and Drug Administration approval, from the FDA's own panel of experts, the FDA approved this strong (allegedly 5 times more powerful than Vicodin) medication last fall. Unlike other opioids on the market, this one comes without all those pesky anti-abuse ingredients and precautions. This one can be easily and readily crushed for ease of abuse. The medication is so strong that it has been referred to as "heroin in a pill."

Massachusetts tried to take action on its concerns about this strong narcotic. The Governor banned its sale by executive action. The maker of Zohydro, Zogenix, filed a complaint and alleged that the Commonwealth's executive order banning the sale of Zohydro is unconstitutional and they sought an injunction. On April 15, 2014, the court granted the injunction and precluded enforcement of the state's ban. The court concluded that the FDA action approving the drug preempted the Commonwealth's ban. 

Zogenix successfully argued that the Supremacy Clause of the Constitution compelled the conclusion that anything in "state law that conflicts with federal law is without effect." (citations omitted). The court noted that the purpose of the FDA is to "protect the public health." Therefore, the FDA approval of this opiod is an endorsement of its "safety and effectiveness."  The court concluded that if the states could add or substitute their own requirements, then that "would undermine the FDA's ability to make drugs available and to promote and protect the public health." The court concluded that the public's ability to access this medication was essentially "in the public interest," and granted the injunction against Massachusetts. 

I think I understand this. If the Federal government decides on a question of public health, then the states have no right to act contrarily to that decision, even if the state believes that it is acting for the health, safety and welfare of its citizens. Curiously, the order does not address the Constitutional maxim that "police" powers in our system of separation of powers (federalism) are reserved to the states. By definition, police powers are those for the protection of the "health, safety, and welfare" of citizens.

Marijuana was once grown and freely traded in this country. Early in the 20th Century, states began to prohibit its production and sale. Then the federal government acted on it, an it is now a Schedule I drug under the Controlled Substances Act of 1970, classified as having a "high potential for abuse." The Court (that is the United States Supreme Court) has affirmed the "federal government has the right to regulate and criminalize" marijuana. Just another example in which the federal government has acted regarding public health.

In 2012 Washington state and Colorado legalized recreational marijuana use. One commentator noted that these were "historic" because this is "the first legalization in the world." He notes that there is a misconception that pot is legal in the Netherlands, but that "it is illegal there. They just don't enforce the law." Curious, a government electing not to enforce the law. 

So, when thousands began buying marijuana in Colorado stores and smoking it, surely the outcome would be similar to the Zohydro case in Massachusetts. The federal government has regulated pot, and therefore the states would be as powerless to regulate in any contrary way as they are to regulate Zohydro? 

No, the federal government has apparently made the same decision as the Netherlands. They will not enforce federal law. According to some, the federal government is even "willing to help legal marijuana sales run as smoothly as possible," and will try to encourage banks to deal with pot sellers without consequences they might otherwise face when dealing with drug dealers.  

Do states have the authority to regulate contrary to federal regulations and codes? These two examples lead to curiosity. The rule seems to be that states cannot ban what the federal government approves by administrative action (Zohydro), but that states are free to legalize and promote what has been forbidden by federal statute. 

Interesting. 

Tis the Season to be . . . Prepared

It was a tough weekend around the country. Tornadoes tore through Arkansas; at least 16 are dead. Oklahoma reports one dead from a tornado there. Storms in North Carolina yesterday are responsible for the death of an infant and damage to more than 200 homes.

It was a beautiful day at the beach here yesterday, a "chamber of commerce" day. That we can enjoy such weather while others are devastated is troubling. We Floridians can empathize with destructive weather. We have lived with it many times, with multiple storm strikes some summers.

I am no fan of tropical storms or hurricanes. However, we are fortunate at least that we get significant warnings of these weather events, unlike tornadoes. With that in mind, we are fools if we fail to take full advantage of the warning we receive.

The hurricane season runs from June 1 through November 30. So, we are about a month from the start of the season. Fortunately, the 2014 season is predicted to be "quiet." The forecasters from Colorado State University predict that nine tropical storms will form, and only three will become hurricanes in 2014.

According to the USA Today, these "top forecasters" have not been very accurate in the last couple of years. They note that in 2012 the actual storm activity was double what the forecasters predicted. In 2013, they predicted nine hurricanes, and only two formed.

So, we cannot necessarily count on the predictions. More importantly, even if they are correct and only three become hurricanes this season, that is of little solace if one of those three comes to your town.

The National Weather Service provides information on specific storm formation and tracking. This website should be in every Floridian's internet "favorites." This information is very valuable and will help you know when your town may be threatened.

The National Hurricane Center also provides tips on being prepared for hurricanes. They recommend that you prepare in advance. Compile a list of resources. If an evacuation is ordered, where will you go, and how will you remain in contact during your absence? How will you return to your home and work after the storm and communicate with your family, friends, and coworkers?

I recommend that you review the OJCC emergency closure procedures now. If the OJCC must take action in response to a storm, we will communicate that on the OJCC website, on this blog, and through Twitter (there is a link to "follow us" on Twitter on the OJCC website www.fljcc.org). Talk with those with whom you work regarding how your company or firm will react if the worst happens. Update your contact list. Discuss how you will receive news and stay in contact with family, neighbors, friends and work.

In short, let's take advantage of the fact that we get warning when hurricanes are coming. Unlike those who face tornadoes, we will get days of notice if weather threatens this summer. Make a plan, be prepared, and keep in touch. If we can assist you with understanding how we will react in the event of an emergency, please feel free to contact me, david.langham@doah.state.fl.us.

Opt out experiment is progressing in OK state

There is news this week about the “Oklahoma Opt-Out,” which made a splash last spring. Essentially, the Oklahoma legislature passed a opt-out from workers’ compensation, which is available at the sole discretion of the employer. That law was immediately challenged under the Oklahoma Constitution. Because of a specific provision of Oklahoma law, that challenge proceeded upon a very expedited calendar, and was heard by their highest court before the end of 2013. That is very fast to say the least.

The Court denied the Constitutional challenge. Leading some to report that the Oklahoma opt out “is Constitutional.” Others caution that the Court’s decision in Coates v. Fallin is not an affirmation of the opt out, but merely a conclusion that the process used to pass the law was not infirm. The challenge in that litigation was to the process, which would be similar to a Florida “single subject” challenge. In short, the plaintiffs in Coates alleged that the statute that was passed addressed more than one subject and so should be stricken, the court disagreed. That is really the extent of the Coates decision.

The Coates dissent points out that despite the conclusion that the law was passed using an appropriate process, there are concerns about due process under the new opt out. Judge Reif expressed an opinion that “under the opt out system, the employer and any “appeals” committee chosen by the employer cannot satisfy the impartiality requirement of due process.” This is an interesting advisory opinion by the Judge. Some question whether it leaves any doubt as to what this particular judge’s opinion may be after the facts and argument on that particular challenge are raised and considered by the Court. Some have questioned whether this judge has already, prematurely, decided that and other constitutional issues.

According to WorkCompCentral on Friday, three carriers in Oklahoma are now marketing policies under which employers in that state could offer the “equivalent of” workers’ compensation and opt out of Oklahoma workers’ compensation. They report that Safety National, OneBeacon, and Great America Insurance have all received the approval necessary to offer the Oklahoma Option. None of these are among the biggest carriers. Will the large workers' compensation providers spend the resources to offer such policies/programs?

In case you missed the previous blog posts on this subject, the opt out is being watched coast-to-coast. It allows employers to create their own workers’ compensation processes, complete with tort immunity (the existing opt-outs in Texas and New Jersey law do allow opt out, but at the price of tort immunity). Employers with such processes will not be subject to that state’s workers’ compensation judge’s jurisdiction. Disputes will be decided through processes defined by the employer’s plan.

This is not something new. It is getting a significant amount of press and being referred to as “unprecedented.” However, the same opt out has been available in many states for many years, including Florida, but only for employers with a collective bargaining agreement. That is, unionized companies have had the ability to opt out for a long time, and many have. In Florida, the most recognized examples have been sports teams, but there have been others.

Those employers opted out through a negotiated agreement with labor. The unprecedented element of the Oklahoma law is that it allows that opt out at the sole discretion of the employer.

Critical questions are coming in the months ahead, as these Oklahoma plans are adopted, standing is created, and the constitutional merits of the law are challenged. Is the employee/labor union participation in formation of the alternative process the critical element upon which collective bargaining plan opt outs have succeeded? Does that participation sufficiently protect due process in the collective bargaining opt outs, and is the absence of such participation in the Oklahoma employer opt out the Achilles heel?

Some think that it is. Some think that it is a distinction without a difference. Virtually all that I have spoken with think that if the Oklahoma opt out survives, it will spell the end of workers’ compensation as we know it. The contention is that with such employer control will come significant reductions in cost for Oklahoma employers.

If that comes to pass, the proponents say that other states will be forced to adopt such opt outs, or watch business leave their state for the greener pastures of Oklahoma. Some think that this option could spread across the country in a matter of years, effectively ending attorney involvement in the vast majority of work injury cases. Time will tell. As the attendant recently said on flight I took, "please make sure that while seated you keep your lap belt loosely fastened, there is always a chance of turbulence."

NY and FL Produce an Interesting Comparison

New York and Florida have roughly the same populations. The United States Census Bureau estimates there are 19,651,127 New Yorkers and 19,552,860 Floridians.

The Florida Office of Judges of Compensation Claims had a budget in 2012-13 of $16,142,140.  The Florida Division of Workers' Compensation budget was about $25 Million. The total  Florida expended that a year for workers' compensation regulation and adjudication was about $42 Million.

New York announced recently that it is cancelling its "scanning services" contract this year, and entering into a new contract. According to WorkCompCentral ("WCC") they had contracted with the New York State Industry for the Disabled, to pay them $49.7 Million over five years. This is to scan "millions of pages of documents from hundreds of thousands of claims a year." That is roughly $10 Million annually expended scanning documents. 

The NY Board is cancelling that contract and will substitute a contract with Xerox instead. They anticipate "cost savings" from the switch to the new contract with Xerox, but there is no statement or prediction as to how much savings. They have also arranged for Xerox to make "a dedicated effort to employ disabled New Yorkers," essentially maintaining employment for those who were scanning for them under the prior contract. That is an admirable goal for certain. 

I am sure that some of that paper that is coming in to the Board is related to the regulatory side of the workers' compensation process. That is the functions of our Florida Division of Workers' Compensation. But, it is clear from the WCC story that significant volumes of the inbound paper is related to the litigation process  which the Board also manges. 

According to Robert Grey, a claimant's attorney cited by the WCC story, a document filed with the NY Board on a Monday may not have been scanned and docketed by that Friday when a hearing is to occur. He relates that this situation leads to complications regarding the judicial decision making. He opined that the "gap" between filing and the document's availability on the docket is seven to ten days. He attributed that to the vendor performing the scanning services. 

We have lived and worked through Florida's long OJCC transition  as old paper files were converted to digital images and loaded onto dockets and/or stored in archives. It was not a easy process. However, I think it is worth noting that the OJCC made that transition without contracting with anyone for scanning services. That transition came from the effort of our central and district clerks, secretaries, mediators, and even judges. No tens of millions of dollars were required.

The secret to making the e-filing process work is mutuality of benefit. While the NY Board is paying $10 Million annually to scan documents, the attorneys, insurance carriers, and employers there are paying postage to send that paper in to the Board. Employees are being paid to print documents, collate them, and stuff them into envelopes that they have addressed. There is much that those parties could save if they could instead convert their documents to PDF images and electronically load them into the docket. Likewise, with the PDF, there is no opening, sorting, or scanning on the receiving end.

 

We have built a system that is free. The system saves both the state and the users money. Lots of money. I calculate that our users (you) save about a million dollars annually. Best of all, the system lets the attorneys ad the documents into the case dockets and receive instant proof of filing. There simply is no "gap" here in Florida.

The earliest suggestions for a paperless OJCC met with skepticism. I have explained many times that the paper conundrum analogous to a reservoir, but instead of being filled with water, it is filled with paper. Lots of paper. Decades of paper in some instances.

For example, when we cleared one of our single-judge offices in about 2008, the volume of paper was about two Ryder trucks full. Much of that paper was obsolete and was destroyed. Much of it was scanned and archived.  

 

To drain the reservoir requires a two prong approach. The "inflow" must be stopped. A process for transmission of documents electronically is critical. However, even f the inflow is stopped, the existing volume must be "drained."

The mutual benefit of the electronic paradigm is benefitting the market in two ways. First, we are efficient and effective, saving on budget dollars and keeping the Trust Fund sufficient with minimal assessments. Second, we are saving money for those who do business with us, helping them avoid expenses like paper, toner, ink, envelopes and postage.

New York is spending about 24% ($10 Million/$42 Million) of the entire Florida regulatory/adjudicatory budget just on scanning documents. Florida's workers' compensation system has much about which to be proud.



On Timelines and Deadlines

The news this morning brings a story about the Pennsylvania Office of Adjudication (POA). According to WorkCompCentral (sorry I could not find this story or similar reference on any non-subscription source), the POA is encouraging judges there to "reduce the number of cases they manage that are more than 12 months old." This was communicated to the judges in a memo"recently." 

WorkCompCentral cites the blog of Glenn Neiman, a claimant attorney from the Philadelphia area. Mr. Neiman describes the procedural process in Pennsylvania, in which there is testimony by the injured worker, testimony or a deposition of a fact or other witness, and a deposition of "at least one medical expert on each side." Then legal briefs are written and submitted. He says that "this can take well over a year to all of this completed."

Mr. Neiman writes that the move to have cases determined in something under a year is being referred to as the "rocket docket" in Pennsylvania by "a few" of the workers' compensation judges. He notes that he is "certainly aware of the hardships that injured workers face while awaiting a decision in their cases" and that he hopes "this push by the Bureau was triggered by concern for the injured worker, and not simply an effort to justify a new expensive computer system." Pennsylvania dove into the electronic age last fall with the roll-out of a state-of-the-art electronic case management and e-filing platform. See Congratulations Pennsylvania.

Over the years, I have many times heard the criticisms of deadlines imposed by the Florida legislature in workers' compensation. Some of the first I recall were in 1991. Back then, an injured worker would file a "claim" with the Division of Workers' Compensation. Then when ready to proceed with actually litigating the claims, another form was filed, the Application for Hearing. It was this latter form that invoked the jurisdiction of the Office of Judges of Compensation Claims. 

In the 1991 statute, the legislature required that a pretrial had to be held by the JCC "no earlier than 30 days after the filing of the request for hearing and no later than 60 days after such date." Further, the "final hearing must be held and concluded within 120 days after the pretrial hearing." There was also a requirement that the parties would have 90 days for discovery between the pretrial and the final hearing. Thus, from the filing of that Application for Hearing, the trial process would have been concluded within 180 (60-day limit for pretrial and 120 after that for trial) days, or roughly six months. 

I have vivid recollections of judicial reaction to that timeline. The one that sticks in my head was expressed at an informal gathering of attorneys and judges in a waiting area one morning. Back then, lawyers used to congregate at the workers' compensation office periodically on either "motion day" or "joint petition day." These were days in which we all had various bits of business to conduct and we all showed up, signed in, and awaited our respective turn. I will never forget one sage judge's statement about the "new rules." He said, "I don't care what they write in the statute, it can't be done." It stuck in my head, because on my walk back to the office that morning, I could think of nothing but "How does he know, he has not even tried."

That 1991 statute did not survive intact for long. The Florida Legislature came back to the workers' compensation legislation again in the 1993 special session and the Application for Hearing was replaced with the Petition for Benefits. Under that law, a mediation was to be noticed within 7 days and held within 21 days of Petition filing. A pretrial was to be held within 10 days of commencement of mediation, but the parties had to receive 7 days' notice of the pretrial. The parties were to have at least 30 days for discovery and the trial was to be concluded within 45 days of the pretrial. That means the Petition to trial would be 76 (21+ 10 + 45) days. The Judge was to issue the order in a summary manner within 14 days.  

Today, we are under statutory parameters that are somewhat longer. The 14-day requirement for the order was changed to 30 days in 2001. In 2002, the timeline to mediation was amended to within 90 days of PFB filing, with notice to be provided within 40 days, and the trial was to be held within 210 days of Petition filing. The 2003 amendments changed the mediation process slightly, forbidding notice of mediation until 40 days after Petition filing, and increasing the time for it to occur from 90 to 130 days of filing. 

There were those who said that these timelines could not be done. Certainly, there are cases in which some or all of these timelines cannot be met. Having conceded that 100% compliance is not possible, or at least not practical, it has nonetheless been demonstrated in the last 10 years that compliance is most certainly possible in many or even most cases. In the 2013 OJCC Annual Report, we noted that the average days from Petition filing to trial in Florida was 485 days (about 16 months) in fiscal 2005-06, and 162 days in 2012-13. The time from Petition filing to mediation had reduced from 212 days on average to only 84 days on average in the same period. The average time between trial and the issuance of the final order had decreased from 76 days to 15 days. 

The issue is not that there may be cases that cannot meet the time frames; there are certainly such cases. The issue is that there are many cases that can be mediated and adjudicated within these time frames. In other words, the fact that some cannot be tried within the statutory times does not mean that none can be tried within them. When they cannot be, the statute provides procedural processes and standards by which additional time may be sought. Has the adoption of these statutory parameters changed the way workers' compensation is practiced in Florida? I suspect it has; I suspect that discovery is planned and scheduled earlier. 

Can cases be tried within 12 months of filing in Pennsylvania? I am no expert on Pennsylvania law or procedure, but I suspect that at least some can be. If Pennsylvania's 12 months is a "rocket docket," I wonder what they would call our 210 days? As I have encountered adjudicators from other states, I have had several ask me "Why does it take that long (210 days) in Florida;" they claim their systems routinely adjudicate cases in far less time. 

Does truth require full disclosure?

I recently ran across a verified motion for fees. The case is not pending before me. This motion listed the statutory considerations from 440.34 and Lee Engineering, and then discussed each in some detail. The section on "the experience, reputation, and ability of the lawyer or lawyers performing the services" caught my attention. 

This provided a fair amount of detail about the attorney seeking the fee. Education experience, bar admissions, and court admissions (federal) were provided. The conclusion was that this attorney's experiences were exemplary. The impression left by the sworn affidavit was that this attorney's qualifications and reputation were absolutely untarnished.

The verified motion did not mention that the attorney had previously been disciplined by The Florida Supreme Court, upon recommendation of The Florida Bar. Is an attorney who has been disciplined by the Court an exemplary attorney? Is that attorney's reputation untarnished? Should an attorney who has been so disciplined make disclosure of that when discussing her or his "experience, reputation, and ability?" Is the failure to do so a material misrepresentation, by omission?

Rule 4-3.3 of the Florida Rules of Professional Conduct defines the attorney's duty of "Candor toward the Tribunal." This provides that a lawyer shall not knowingly make a false statement. It also provides that a lawyer shall not "fail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client." Full disclosure is required when the client is attempting a fraudulent act.

As to the law, Rule 4-3.3 is a bit broader. It requires lawyers shall not "fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel." That seems by its plain language not to apply to facts however.

There is no specific provision which requires that an attorney make full disclosure of facts generally. Would an attorney's former disciplinary history be relevant in a proceeding? If it is relevant, perhaps on the question of whether a particular attorney is or is not exemplary in reputation, then whose duty is it to disclose that prior discipline? If the affiant attorney does not disclose, is it an obligation of the defense to do so? Is that merely a tactical decision for counsel?

The Preamble to the Rules of Professional Conduct tells us that rules which use "shall" or "shall not" "define proper conduct for purposes of professional discipline" and that "every lawyer is responsible for observance of the Rules of Professional Conduct."

I think of the many workers' compensation attorneys with whom I have been honored to practice. I think of the many attorneys whose cases I have heard. There is a long list of highly effective, professional and frankly exemplary attorneys in Florida workers' compensation. 

People make mistakes. Society imposes penalties sometimes. When the punishment is concluded, should that be the end? Is it fair for someone's misdeeds to follow them forever?

I set out to find an answer to this question. I conclude with more questions than answers. What do you think? Email me at david.langham@doah.state.fl.us

How can attorneys help each other in times like these

A story out of Pennsylvania last week reminded me of a couple of situations we have seen in Florida in recent years. The Pennsylvania story (published on workcompcentral.com, which is available only to subscribers) describes a 58-year-old attorney who was recently suspended by the bar for 18 months. His offenses were essentially failing to follow a judge's order to submit medical records, failing to respond to defense motions in another case, and failing to file suit in yet a third. 

Experience suggests to us that a lawyer does not reach 58 years old, still practicing, if such behavior is the regular course. I wonder whether three such instances coinciding in complaints, leading to suspension, suggest that something may have changed recently for that attorney. I have mentioned before, this is a stressful profession. According to the Wall Street Journal, at least attorneys and doctors are not currently in the 10 most stressful professions, but are also not in the 10 least stressful. Still, most would concede that these are stressful occupations. 

Attorneys often hold the future of their clients in their hands. They are expected to remain calm and focused when the unexpected strikes; that witness' testimony changes unexpectedly, or that witness fails to show up for trial, or the medical record most critical to your case is not among those filed for trial and you cannot explain how. Too many deadlines, too many questions, so much to control and so much to predict. Then after the trial, explain to the client what happened, how it did or did not work to the client's advantage, and how the outcome coincides or differs with those predictions provided beforehand. This is a difficult occupation. 

Stress seems to be on the rise. There is an attorney who told me that work hours have increased. Now the attorney is working seven days a week. No time to recharge. There is an attorney who told me that sleep is elusive, with cases, bills, and other challenges nagging at the mind. There is an attorney who can't make the rent, the mortgage, the payroll. There are those who are dealing with illness, family issues, declining work volume, and the uncertainty of new practice areas, explored as their workers' compensation practice fails to support them as it once did. 

The stress pushes attorneys to find solutions. That is a large part of what lawyers do, they find answers to problems. However, when those problems are too close to home, perhaps they cannot see as clearly as they do when they are working on the problems of others. Deadlines can be missed, people can turn to substances, stress can affect the mind, and medical issues can arise. I am certain that this does not address it all. I am as certain that lawyers are unlikely to reach out for help; there is this fear of appearing weak or vulnerable. 

Periodically, I like to use this forum to remind attorneys that there is an anonymous source of help. The Florida Lawyers' Assistance  (FLA) is an organization that has been around for almost 30 years. They hold that "substance abuse, compulsive behavior, and psychological problems are treatable illnesses rather than moral issues." They have resources to assist attorneys, before something happens to result in suspension or disbarment. 

Sometimes  it can be positive just to talk to someone about where you are, what is stressing you, how you are dealing with it, how you plan to get out from under it. The FLA does not report people to The Florida Bar. The FLA helps people deal with their challenges, directly or by referring them to outside resources. I know some fine attorneys whose lives have been changed by FLA. 

The FLA "believes it is the responsibility of the legal community to help our colleagues who may not recognize their need for assistance." In short, there are people around us who need help. They may not yet understand that they do. They may be in denial, they may just be too stressed to look around themselves for long-term solutions as they frantically fight the fires that present each day. 

I hope that by spreading the word about this organization, I remind us all that help is out there. By the same token, I hope I remind you that none of us knows what others are going through. Recently, on another blog, I published the results of Mr. Timothy Dunbrack's project to answer the question "If I Knew then What I Know Now." One answer to that question is relevant here: "I would have acknowledged that despite their bravado and public persona, everyone is under tremendous pressures personally and professionally. I would have had a kind word more often, been more accommodating, been quicker to forgive and slower to anger."

Sound advice. Recognize that stress, fear, or anxiety may be driving behavior that irritates you. Know that people around you may be having issues or challenges which you neither see nor appreciate. Understand that some of them may need a hand in either recognizing or dealing with their situation. Know that there is value in being available to your fellow practitioners, to listen or perhaps to remind them that the FLA is there to help them with either symptoms or the challenges themselves. 

In publishing the 2014 OJCC/Section judicial survey, I noticed that there are about 1,000 attorneys in the workers' compensation section. There are more than that registered as users with e-JCC, but even so Florida workers' compensation is a small legal community. You disagree on much, you advocate zealously, you miss deadlines, you miss issues, you all face challenges. Everyone does.

When you lend a fellow practitioner an ear or a hand, you make our community better. I appreciate you all and hope you will appreciate and assist each other before stress and other challenges ruin a career or worse a life. 

Medicare releases data - Interesting!

ABC News has released an Associated Press story regarding reimbursement to physicians by the Medicare program. It is an interesting read. There are multiple iterations of it on the web this afternoon. 

Essentially, Medicare has released the records of who it paid, and how much, in 2012. One Ophthalmologist in Florida was paid $20.8 million. If you worked twenty-four hours per day, three hundred sixty-five days per year, you could clock 8,760 hours. That $20.8 million would not seem so high if I told you that this is only $2,374 per hour ($20,800,000/8,760). Of course, if you only worked five days a week, took a two week vacation, observed all 10 of the federal holidays, thus working 240 (48 weeks x 5 days) days, even assuming them to be 12 hour days, then this comes out to 2,880 (12 x 240 =) hours. Dividing the $20.8 million by that amounts to only $7,222.00 per hour. 

The first thing we should get from this is that the payments to this Ophthalmologist are for care provided at the business he runs. Some, perhaps most, of the services were provided by employees that may have been other physicians, assistants, nurses. It is also possible that some portion of these reimbursements are for supplies or medication provided in the clinic setting, not payment for services per se. These caveats are likely true for all of the "top paid" doctors. The Associated Press ("AP") grouped them in the "top" by using an arbitrary figure of "greater than $3 million." This was a figure used by an audit last year, and the AP just went with the figure. A total of 344 physicians were paid this much or more by Medicare in 2012. Of that 344, 25% were here in Florida. 

According to the AP story, Florida is "a state known both for high Medicare spending and widespread fraud." That seems a bit harsh. Five states (Florida, California, New Jersey, Texas and New York) accounted for 193 of the "over $3 million" group. More than half of the 344 from just five states. The median payment, however, was much lower, about $30,265.00. 

There are groups and individuals that decry the release of this data. (Medpage Today is running a survey to gauge public reaction to the data release; the comments on that survey are interesting also). There are claims that we (the public) cannot understand the data and that we will jump to erroneous conclusions. I am reminded of a 1927 Louis Brandies quote in Whitney v. California. He remarked that the remedy to be applied is more speech, not enforced silence."

I suspect there is more to these figures that meets the eye on initial examination. I suspect that there may be ways to manipulate this data to support any argument one might wish to make. In the end, however, I think it is a good thing that this data is out there for people to consider. 

If it is inaccurate or misconstrued, the solution to that problem is more people analyzing it and more perspectives being expressed. As the article notes "decision-making patterns are of intense interest to researchers who study what drives the nation's $2.8 trillion-a-year health care system." (did I read that right, it said "trillion" right?)

That said, if I could make $7,222.00 per hour, I am not sure I can honestly tell you how many days I would work each year. I suspect I would not be "full time."

Why does surgery cost double in workers' compensation

'On Monday, this blog was about the disparity in the way medical procedures are reimbursed, and the delay in implementation of the sustainable growth rate (SGR). Interesting questions need to be answered about what the appropriate reimbursement is for medical procedures. We also need to be able to answer the questions as to why the same procedure is not always reimbursed the same. 

We must concede that there may be reasons that a particular procedure may cost more or less. Certainly, timing might influence price. The skill or reputation of a provider may drive people to her/him, increasing demand for those particular services and thus driving up price. These are supply/demand factors that could rationally change the price for services. 

Unfortunately, in the third-party payer system we have, that is not the case. Health insurance plans may "encourage" use of certain providers, those with whom the insurance carrier has contracted for particular rates, called "preferred providers." The encouragement comes in the form of higher out-of-pocket expenses when a patient/policyholder uses a "non-network" provider. Some plans only provide treatment by "network" providers. Often the amount of choice for the patient depends on the price paid for the policy. In workers' compensation, the patient plays little role in selecting the person that will cut their body open. That decision, in Florida, is largely the insurance company's.

How are prices set? Florida has a workers' compensation physician fee schedule. It references the Medicare system parameters, and is therefore somewhat affected by the SGR debate. According to some, workers' compensation fee schedules provide better reimbursement than other insurance, "1.5 to 2.5 times more than HMOs, Medicare and other commercial health plans." It is noted  in the same article that this is justified because workers' compensation treatment requires "more time and resources" than treating other patients, justifying this difference in payment. 

Florida Senate Bill 1580 set course this legislative session to restrict reimbursements to hospitals for workers' compensation medical care. Hospital fees and reimbursement for Florida workers' compensation are not tied to Medicare charges. They are less controlled or restricted. The bill would have capped hospital reimbursement at 120% or 140% of what Medicare pays. 

According to the bill's sponsor, Alan Hayes, employers and insurers pay an average of $11,115 for an outpatient shoulder surgery in workers' compensation in Florida, compared to an average of $5,600 for the same surgery paid by group health insurers. The difference is $5,515. Workers' compensation pays roughly double the cost under group health for the same procedure.

Senator Hayes says that an average outpatient knee surgery in workers' compensation costs $8,441, compared to an average of $4,200 for the same procedure paid by a group carrier. The difference is $4,241; the cost in workers' compensation is again roughly double the cost under group health. These two examples are noted in an April 9, 2014 story on Workcompcentral. I strive not to link to sources that require subscription, but in this instance it is not avoidable. 

According to the Florida Senate, capping hospital reimbursement at 140% of Medicare, as initially proposed in the bill, could cut workers' compensation insurance rates by 7%. They say this would reduce system costs by roughly $200 million. 

SB 1580 is no longer on the course it set out upon. The bill has been amended, and now would form a task force of 17 people to author a report on how best to address reimbursement issues regarding hospital care for injured workers. The issues are unlikely to be simple. Hospitals seek viable reimbursement rates, employers seek lower workers' compensation costs. 

Perhaps the task force will answer the question why the same surgery, in the same operating room costs double in workers' compensation what it costs under group health? Understanding the "why" might make a world of difference to everyone involved. 

Nature abhors a vacuum

This idiom expresses the concept that empty space is unnatural and will be filled by something. That nature will find balance through its own means.

Last week, David DePaolo made a point about medical costs in his blog. He discussed the competing interests and their pursuit of the almighty, but limited, "one" dollar in the workers' compensation industry. His focus was the recent debate in Wisconsin over medical fee schedules, and how medical and indemnity compete for their shares of workers' compensation. 

Fee schedule efforts by the state to restrict what is reimbursed for various medical services are common. Though recent efforts in that regard have failed in Wisconsin and other jurisdictions, fee restrictions are not a new concept. Medicare has been restricting what it pays for medical services for years, as have health insurance companies. Workers' compensation systems have likewise implemented such schedules.

The point here is related to the Medicare schedule, which has significant influence. Last week, the U.S. Congress passed resolutions which defer the effect of the Sustainable Growth Rate (SGR). They likewise deferred implementation of the ICD-10, but that is a discussion for a different day. SGR is an attempt to control federal medical costs by cutting reimbursements paid by Medicare. Though Congress passed these constraints, they have repeatedly delayed implementation. Each time they do, they have to find dollars elsewhere in the budget to make up for the projected savings that their implementation delay results. 

If you are going to rob Peter to pay Paul, you better be sure that Peter has money. Unfortunately, robbing other budget lines to cover the SGR delay, in the current budget, is borrowing from one bankrupt to pay another bankrupt. 

There is a national debate ongoing regarding the SGR. It is not directly related to workers’ compensation, it is a Medicare issue. However, the manner in which Congress deals with the SGR debate has the probability of sending ripples through the state’s workers’ compensation systems. SGR could materially change how much physicians are paid. 

The trend has been to impose restrictions on the amount a physician can charge for various services. This occurs in voluntary markets through contracts between third-party payers, such as health insurance companies. Physicians negotiate rates for services with these companies, and the companies sell access to their resulting physician networks to policy-holders.

Medicare uses a similar process. Their's is arguably less a negotiation. The agency defines allowable reimbursement rates for care. Doctors are then free to either treat Medicare patients or to decline. The same is true for workers' compensation. Unfortunately, in much of Florida, many doctors decline.

With the nationally established Medicare benchmark, states have created their workers’ compensation fee schedules. In many instances, these are “tied” to Medicare. With this method, a state need not assign its own independent value to a medical procedure or service, it merely associates its state value by some comparison to Medicare. For example, a state may provide that workers’ compensation medical care shall be paid at a rate of 120% or 140% of the allowable Medicare rate. If the Medicare rate rises, so does the state workers' compensation rate, and the converse, if Medicare rates decrease so do the state rates. Currently in Florida there is a bill pending to tie workers' compensation hospital fees to Medicare in this same manner. 

Since 2012, the SGR has been effectively zero percent. Congress, having decided that medical care rates needed to be cut, passed the SGR. They defined what would be cut to "save" federal budget dollars. The medical industry has lobbied for a repeal of the SGR, but has instead accomplished delay in its implementation. Repeal would cost about $180 billion. Implementing the intended reductions would reduce what Medicare pays doctors by about 24%. The latest vote last week puts the cuts off for another year. When they put off the cuts, they find money elsewhere in the budget to cover the "lost savings."

You know what they say, "a billion dollars here, a billion dollars there, pretty soon you are talking about real money." I cannot find who said that, but it is an interesting quote.

Consider what all of this really means. A doctor performs four identical procedures, or evaluates four identical patients, on a particular day; one is on Medicare, one is an injured worker, one has a group health policy, and one has no insurance. Let us presume that the normal charge for such care is $250.00 per patient. Thus, the total billing should be $1,000, that is four patients at $250.00 each. Of course, most practitioners could not stay in business at a rate of $1,000 per day; office rent, staff salaries, malpractice insurance, supplies, etc., this is merely a hypothetical.

If Medicare today reimburses this hypothetical procedure or evaluation at $100.00, then the physician's earnings on that quarter (using the four patient/procedure example) are markedly reduced, a loss of $150.00. 

By implication of the workers' compensation fee schedule (using the example above of 140%), the physicians earnings on that procedure/evaluation are also markedly reduced; they are $140.00 instead of the $250, a loss of $110.00. 

The group health patient/procedure will almost certainly not pay the $250 either, but that is what they will be billed. A variety of factors might be employed by the insurance carrier to reduce that amount, one of which is paying a percentage of "usual and customary charges," that is the group health contract will pay a percentage of what they deem "normal" charges for that procedure. The key word in much of this analysis is "charges." To some extent, what the doctor gets paid is dependent upon what is charged, not just by this doctor, but by doctors generally. For the sake of the example, let's say the group carrier pays $200.00 for this procedure/evaluation.

The uninsured is difficult. There will be those who pay for their medical care, and others that simply will not. The reality is that many medical bills are not collected by physicians, and that others are collected only through intervention of costly collection agency or legal processes. The amount collected for this "self-pay" is therefore unlikely to be the $250.00 either. For the sake of argument, let's say the doctor gets $150.00 from the self-pay patient as that is what they can (or say they can) pay.

For the four procedures that should (more on "should" below) total $1,000.00, the doctor receives $590.00 ($100.00 Medicare, $140.00 workers' compensation, $200.00 group health and $150.00 self-pay). All of these realities lead to the simple outcome that the doctor in this example is not going to make the $1,000 that might have been expected at the outset. As bad, it will take months to get paid whatever is received, yet another conversation for a different day. 

If SGR were implemented, then the doctors would face a 24% Medicare reduction. The Medicare patient that generated $100.00 in our example then generates $76.00. The workers' compensation patient now generates $106.40 (140% of $76.00). If the group health and the self-pay payments remain constant, then the $590.00 is reduced to $532.40 ($76.00 Medicare, $106.40 workers' compensation, $200.00 group health and $150.00 self-pay). The reduction in doctor revenue is about 10% total ($590.00-$532.40 = $57.60 = 10% app.).

This begs the question. What is the procedure/evaluation worth. If it is worth $76.00 then why should the group health or the self-pay expend any more than that to obtain it? If the value of the service is $250.00, then what is the effect of suppressing the price below that rate for some volume of those performed? Why does one market (Medicare or workers' compensation) subsidize or receive subsidy from some other market segment such as group health or self[pay?

I would guess that the value is neither $76.00 or $250.00. I would guess that the value is between these. I wonder whether, much like the tax code, there is some population who benefits by the complexity of these processes?

Years ago, when I was involved in the medical business briefly, I received two brochures in the space of a month. When disposing of these, I noticed that both came from the same company, but were intended for different audiences. 

One promised me that with this company's software, I could input my activity regarding a particular patient, and the program would select the best billing codes, and sequence them to result in the highest possible reimbursement. A boon to the medical provider. 

The second promised me that with this company's (same company, second brochure) software, I could input the billing codes as charged by any provider and the program would select less expensive billing codes as alternatives, and re-order them in such a way as to minimize the reimbursement. A boon to those who pay medical providers. Perhaps there are those who benefit from the system's complexity.

Congress acted last week to delay SGR for another year. Is Medicare paying too much, if so why keep doing so, why not implement SGR? Is Medicare paying too little, if not why are group health, workers' compensation and self-payers paying more? If SGR is the solution, why not implement it? If SGR is a mistake, why not repeal it? Why can this whole process not be simplified? Why not make one determination as to how we value these services, then charge and pay that amount? 

How to value medical services is the subject of a national debate. There are obviously many constituencies, and many competing interests. Perhaps, however, someone can explain the point of long debates, compromises and passing bills (SGR) if they are not the right thing to do. While they are at it, they might explain why delayed implementation somehow is better than repeal. It seems a confusing mess from this perspective, and with the impact Medicare has directly and by implication on so many providers, it would seem there is great benefit in predictability, transparency, and consistency. 

Know when to hold 'em

Counsel can become difficult to get along with sometimes. Lawyers are typically reasonably sure of themselves. They typically believe that they are right, or at least believe they can convince others that they are right. That is what lawyers do, and being confident and persuasive is important. The simple fact of the matter, though, is that no one can ever be right all of the time. Thus when two attorneys enter a procedural hearing, each believing her/himself to be right, it is probable that, right or wrong, the judge will have to disagree with one of them.

Thus it can often be with discovery disputes. These can be about documents, depositions, objections or even designations. One judge recently said "I have noticed a trend toward 'gamesmanship' in lieu of professionalism." Well phrased, but certainly not an isolated interpretation.

Last summer I was discussing Florida' motion process with an adjudicator from out of state at a conference. She told me that many of her motion to compel hearings are a waste of time because there is no dispute. One side has duly requested the documents. The time has passed for response. Phone calls have been made, emails written, proposed motion supplied. The motion is filed/served, and a hearing set. Then it is in the waiting room before the hearing where the attorneys finally discuss the issue, and the non-responding party commits to soon produce the overdue documents.

They then come into the hearing and instead of laying this simple set of facts before the judge and asking for an order compelling production within the (now) agreed ten additional days, the moving party engages in an argument in support of the motion. Then when it is the opposition's turn, they candidly admit they have no opposition, there is no real issue, this could all have been avoided, could the order afford them ten additional days? This has wasted the judge's time. If there is no dispute, why is an argument needed, why not just lay it out, and ask for the order both sides now agree upon?

There was a cereal commercial years ago in which three brothers are engaged in breakfast. Before them is a bowl of cereal, and the two older brothers argue about which of them should try it first, "I'm not gonna try it—you try it!" Back and forth they argue. Eventually, the agree to foist that honor on the youngest brother, "Mikey." It was an iconic bit, which illustrated a point about trying new things. I find it similar to some disputes about depositions.

We see instances in which a party will not produce their witness for deposition until they have deposed the opponent's witnesses. Arguments such as "I will produce (the adjuster, employer, claimant) as soon as they have given me the chance to depose (the adjuster, employer, claimant) first." Asked why a particular side should get to go first, there are a variety of arguments. A favorite is "because that is how it always done." Another that is interesting is "because I asked first." There are also logical arguments sometimes delivered.

Recently a case was described to me in which the dispute was not about the order in which the depositions of each opposing parties witnesses would occur. This dispute was about the order in which one side would be allowed to depose each of the other side's witnesses. The crux of the dispute was the venerable "rule" whereby non-party witnesses are excluded from attending depositions of other witnesses until their own testimony has been preserved. In the described instance, an attorney wanted a particular order of deposing the other side's witnesses so as to prevent certain later witnesses from attending certain early witnesses testimony. This dispute required a hearing to sort out.

There are similar instances sometimes described about the designation of corporate representatives for trial. One side will refuse to make that designation until the other party has been deposed. In multiple corporate entity cases (think of construction disputes with multiple potential employers and indemnification disputes) multiple sides will have a corporate designee to testify about those corporate facts. In those instances, the parties will sometimes similarly disagree "I will designate a representative, but not until he/she designates his/hers."

All of these disputes happen. They can consume a great deal of time. Lawyer's time, client's time, judge's time. Often, there is no authority on the books to assist with determining them, and so they are often likely to be disputes "in the sound discretion of the trial judge." How are they decided?

I would suggest that it is powerful to have a logical argument. I discourage the arguments "because that is how it always done" and "because I asked first." I would suggest that persuasion is more likely with a logical argument that explains why it is important that your methodology be adopted. For example, "if we depose that witness before the records custodian, we may well have to depose that witness again after we receive the records through the record custodian."

Counsel should remember that one of every two parties that come to a motion hearing will likely lose. Disputes that get to that stage sometimes become "all or nothing" for one party or the other. Try not to engage in disputes that can be resolved.

For example, certainly the location of a deposition may be important in a particular case due to expense or otherwise. But is location that important otherwise. Years ago a lawyer related a situation to me. She wanted to depose a witness, who refused to come to her office for that purpose. She likewise refused to depose the witness at his office. Both were seeking the "home field advantage" and they were at loggerheads about it. They took the dispute to the judge. The judge ordered the deposition to occur at a court reporter's office. That solution, neutral ground, could have been reached by these two at any time, without the judge's involvement. As the lawyer related the story to me, I remember wondering why they had not compromised instead of going to hearing (I guess I missed the point of the story).

In a similar dispute as to location, a Federal Judge in Florida issued a now famous (viral) order regarding settling differences the Court deemed to be unworthy of judicial intervention. In Avista Mgtt v. Wausau Underwriters Insurance (M.D. Fla, 2006), the court ordered the attorneys to engage in a game, with specific rules, at a specific place:

"[T]he Court will fashion a new form of alternative dispute resolution, to wit: at 4:00 P.M. on Friday, June 30, 2006, counsel shall convene at a neutral site agreeable to both parties. If counsel cannot agree on a neutral site, they shall meet on the front steps of the [Courthouse]. Each lawyer shall be entitled to be accompanied by one paralegal who shall act as an attendant and witness. At that time and location, counsel shall engage in one (1) game of 'rock, paper, scissors.' The winner of this engagement shall be entitled to select the location for the 30(b)(6) deposition to be held somewhere in Hillsborough County during the period July 11-12, 2006."

One wonders how such a dispute such as that reached the point that such an order was necessary? Should "rock, paper, scissors" be the "go-to" solution?